After giving a speech at the John F. Kennedy Library yesterday, Romney said there would be no more free riding under his plan.
(Globe Staff Photo / Janet Knott)

Romney eyes penalties for those lacking insurance

Costs are key in health plan

By Scott S. Greenberger, Globe Staff | June 22, 2005

Massachusetts residents who choose not to obtain health insurance would face tax penalties and even the garnishing of their wages under a proposal Governor Mitt Romney unveiled yesterday.

Romney says the ''individual mandate" he is proposing, part of his broader plan to cover the roughly 500,000 people who are uninsured, would not cost the state any money. But some healthcare specialists say the approach might cost hundreds of millions of dollars more than state taxpayers currently provide for government health coverage.

Romney's plan would require all residents in Massachusetts to have some form of health insurance or agree to pay their medical bills out of their own pockets. No other state has such a requirement, and if Romney manages to make it law, it would be a compelling accomplishment he could point to if he runs for president.

Currently, people without health insurance often go to hospitals and receive care they never pay for, because the hospital and the state pick up the tab. Under Romney's proposal, uninsured Massachusetts residents would be asked to enroll in a plan when they seek care.

If they refuse, the state could recoup the medical costs in several ways, Romney said yesterday: The state might cancel the personal tax exemption on their state income taxes, which is worth about $175. It could withhold some or all of their state income tax refund and deposit it in what Romney called a ''personal healthcare spending account." Or, it might take money out of the person's paycheck, as it does now to collect child support.

''No more 'free riding,' if you will, where an individual says: 'I'm not going to pay, even though I can afford it. I'm not going to get insurance, even though I can afford it. I'm instead going to just show up and make the taxpayers pay for me,' " Romney told reporters after a healthcare speech at the John F. Kennedy Library.

Although Romney began rolling out his healthcare proposals last fall, he has never before called for an individual mandate. In a telephone interview with the Globe after yesterday's speech, he said he decided to include the requirement after concluding that his other proposals could make private insurance affordable for everyone.

Romney said he wants to make healthcare coverage less expensive by permitting private insurers to offer low-cost policies with scaled-back benefits. People earning too little to afford even those plans and making too much to qualify for Medicaid would be eligible for state subsidies to help them purchase insurance. Medicaid or MassHealth would remain in place for the poorest state residents unable to afford any private insurance.

The Romney administration estimates that about 460,000 people, or 7 percent of the state's population, are uninsured. Of those people, the administration calculates that 106,000 are eligible for Medicaid but not enrolled. The governor says roughly 200,000 earn more than 300 percent of the federal poverty level, or $48,270 for a family of three, and will be able to afford the low-cost policies insurance companies will provide under his plan. The remaining 150,000, who make too much for Medicaid but not enough to afford the discounted plans, would get state subsidies to help them pay for private insurance.

''It's the ultimate conservative idea, which is that people have responsibility for their own care, and they don't look to government to take of them if they can afford to take care of themselves," Romney told reporters after his speech.

Massachusetts spends more than $1 billion a year on medical care for the uninsured through its ''uncompensated care pool," and Romney argued that simply redirecting that money would pay for his plan. He said those dollars will go further if everybody has insurance, because they will see their doctors for preventive care instead of visiting emergency rooms in a crisis.

But a report released separately yesterday by the Blue Cross-Blue Shield Foundation raised questions about the approach endorsed by Romney. The authors of the report said they could not put an exact price tag on Romney's proposal, but that a similar plan to cover all the uninsured would cost an additional $700 million.

''If you're going to provide comprehensive benefits at an affordable level, I don't believe you can do it without any new spending," said Linda J. Blumberg, an economist at the Urban Institute who coauthored the report.

Nevertheless, some of the governor's toughest critics gave his idea a warm reception yesterday, even as they noted that he has yet to disclose important details.

''I am delighted that Governor Mitt Romney is serious about providing affordable healthcare to all citizens of this state," said Philip W. Johnston, chairman of the Blue Cross Blue Shield Foundation and of the Massachusetts Democratic Party.

US Senator Edward M. Kennedy described Romney's call for an individual mandate as ''a healthy step forward," but added that ''details of the benefits offered and the level of cost-sharing individuals will face are crucial to understanding this proposal."

Senate president Robert E. Travaglini, the other leading figure in Beacon Hill's healthcare debate, said of the individual mandate, ''I wouldn't rule it out." Travaglini's own plan sets aside $100,000 to study the idea of an individual mandate.

''Nothing is going to be dismissed outright; this is too important of an issue," Travaglini said.

But John McDonough of Health Care for All, which is part of a large coalition of groups pushing for a healthcare plan that would force most employers to cover their workers, said that Romney's plan might create an incentive for some companies to stop offering coverage. And Rabbi Jonah Pesner of Temple Israel in Boston, who is helping lead a drive to put a healthcare proposal with a tax increase and an employer mandate on the 2006 state ballot, said he was disappointed by Romney's remarks.

''I believe in individual responsibility, absolutely," Pesner said. ''But to step back from the shared responsibility, both of the government sector and the business sector, and put it all on the individual feels completely unacceptable to me."

In calling for an individual mandate, Romney is allying himself with influential conservatives such as former US House speaker Newt Gingrich, Governor Arnold Schwarzenegger of California, and the Washington, D.C.-based Heritage Foundation. But he also risks alienating critics who say the idea is overly intrusive.

''All around us, we see signs that government mandates and heavy-handed, command-and-control models of providing healthcare don't work and people are abandoning those, and yet the governor seems to be running toward them," said Michael Cannon of the libertarian Cato Institute.

Gary Claxton -- vice president of the Kaiser Family Foundation, which studies health policy -- said individual mandates have been rejected before because Americans ''don't like to tell individuals what to do."

Karen Davis, president of the Commonwealth Fund, a private foundation that supports research on health and social issues, said: ''The sticking point has always been the affordability of coverage. It's one thing to tell people they have to buy it. If they can't afford it, what do you do? Fine them? Put them in jail?"